The middle classes were won over by Lidl and Aldi, now cash-and-carry chains
are thriving. But is it worth paying to join?

Cash-conscious families continue to find new ways to save money on their weekly grocery haul. Many have turned to budget retailers Lidl and Aldi. Next, it could be cash-and-carry outlets, the traditional haunt of corner shop and restaurant owners.

Costco, which began as a wholesaler in Seattle in 1983, is one of the largest cash-and-carry chains in Britain, with 25 stores selling everything from toys and furniture to books and food at discounted prices.

Since many of its customers are shopkeepers, who sell the goods on with their own markup, its prices ought to be attractive.

The company’s boss, Craig Jelinek, said Costco offered lower prices by “eliminating virtually all the frills and costs historically associated with conventional wholesalers and retailers, including salespeople, fancy buildings, delivery and billing.”

Although the chain is geared towards offering its products to members only – those in trade or individuals from specific employment groups, such as public-sector workers – the wider public can now use the retailer too, although only online.

But if you simply log on and shop as a “non-member” you will pay a 5pc surcharge at the checkout.

There is a range of membership options.

For an annual fee of £15 (including VAT), shoppers can get an online-only subscription to Costco.co.uk that means they avoid the 5pc surcharge.

The next level up is called “full warehouse” membership. This costs £24 a year for business customers or “those in trade”, and £30 for individuals who are not. The membership includes a complimentary card for a spouse or partner.

“Executive membership”, which rewards cardholders with 2pc cashback on most purchases each time they shop, costs £60 for trade or £66 for ordinary shoppers.

American Express also offers a Costco TrueEarnings credit card, which rewards Costco members exclusively by paying 1pc cashback (up to £300 a year) to those shopping at the retailer.

But are the discounts worth the cost of the membership?

A 70cl bottle of Jameson Select Reserve Irish whiskey costs £34.99 at Costco (including VAT). Tesco and Ocado sell it for £38, while at Sainsbury’s it costs £39.50.

Asda sells a kilogram of Nescafé Original Granules for £25, while Costco sells it for £19.99 – but four or more packs must be bought, requiring a minimum spend of a little less than £80.

Costco sells a 75-pack of Calgon Express Ball washing machine tablets for £14.89 including VAT. Customers must buy at least two packs, though, so a minimum spend of £29.78 is required. Tesco sells the same item singly for £18.

It can be hard to make exact comparisons as Costco sells some brands – of tinned salmon, for instance – that are not sold in supermarkets.

The shopping experience isn’t just about the price, of course. Costco shoppers may have to drive a long distance for their warehouse shop.

As part of its “no-frills” policy Costco does not have fitting rooms for customers, credit cards are not accepted, and all bags and receipts are checked when leaving the store to “maintain accuracy in inventory control”.

Costco customers have taken to internet forums to discuss the cash-and-carry retailer, and their comments give a flavour of the potential savings and general shopping experience. One user wrote: “I find that I can save 20pc-30pc on some bulk-buy items, like washing powder, fabric softener and nappies.”

Another said: “Every time I check [Costco’s] wine offers they are more expensive than Sainsbury’s and Tesco. However, there are the odd things that are cheaper, such as dog food and washing detergent.”

It’s vital to remember that Costco’s shelf prices omit VAT, making items appear much cheaper than they actually are. At the checkout, both in store and online, the VAT (20pc) is added, increasing the price the shoppers might initially have thought they would pay.

Costco isn’t Britain’s only cash-and-carry store. Makro’s network is slightly larger, with 30 stores nationwide. Originally a Dutch chain of warehouses, the retailer works in a similar fashion to Costco, allowing all members of the public to use its website, makro.co.uk to order goods with no surcharge, but restricting its warehouse membership to cardholders – typically those in the catering business.

One user wrote on the forum money.co.uk: “Tried Makro – but the distance and cost of getting there outweighed any savings.” Another wrote: “We are a family of four and the last time I went to Makro I compared the prices on my receipt to shopping at Tesco online. It was actually cheaper for each product to shop at Tesco.”

Do you use cash-and-carry stores? Tell us your story by emailing money@telegraph.co.uk